Greek Finance Minister Delivers Budget Speech

by Lorys Charalambous, Tax-News.com, Cyprus

12 December 2008

Greek Finance Minister George Alogoskoufis stressed in the recent government budget that Greece's tax system required few changes as the country remains relatively unscathed by the financial crisis.

According to Alogoskoufis, the crisis is hitting the Greek economy to a lesser extent compared with other Eurozone countries. However, the government has still seen fit to formulate a stimulus plan to offer support to hard-pressed businesses and personal taxpayers.

“The plan ensures that the credit system will continue offering loans to small- and medium-sized enterprises and to larger enterprises. It will protect the unemployed and workers in danger of losing their job. It also ensures continuation of large infrastructure projects. The plan will be implemented fully,” he said.

The state budget envisages a continuation of a third phase of the tax reform program, which includes higher tax exempt ceilings for personal incomes and tax exempt social benefits for families with three children.

Regular budget revenues for 2008 are forecast at EUR57.3bn, up 10.7% from 2007. Revenues are expected to rise to EUR64.2bn next year, up 12% from 2008, of which EUR26.7bn will come from direct taxes. Budget spending this year is expected to rise to EUR60.5bn this year up 9.1% from 2008.

The budget envisages that the Greek economy will grow by 2.7% in 2009, down from 3.2% in 2008 with the inflation rate set to slow to 3.0% next year, from 4.3% in 2008.

Investments are expected to rise by 1.5% in 2009, from 0.1% this year and 4.9% in 2007.

After delivering the budget Alogoskoufis commented on recent calls to lower value-added tax on tourist enterprises. However, he quashed hopes of the cut stressing that VAT on tourist enterprises was at the lowest permissible level.

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